Minor Looks at Investing 1 Billion US Dollars in its Hotel Portfolio

Thailand-based Minor International Plc plans to invest 40 billion baht over the next five years in a major expansion of its hotel and fast-food businesses at home and overseas, a senior executive said on Wednesday.

Chaiyapat Paitoon, vice president for strategic planning, said more than half that overall sum will be used to build up existing operations, with about 14-15 billion baht set aside for acquisitions. The company will use internal cash and debt financing to fund the investment, he said.

The firm aims to raise the number of hotels it operates to 210 by 2020 from 145 now, he said, while targeting an increase in the number of its domestic and foreign fast-food outlets to 3,100 by 2020 from 1,851 currently.

Minor, which owns stakes in hotels run under the Four Seasons, Marriott and St Regis brands in Bangkok, as well as Oaks in Australia, is aiming to secure net profit growth of at least 15%-20% a year during 2016-2020, Mr Paitoon said, speaking during a financial presentation to the public.

The company said its 2015 net profit jumped 60% from a year earlier to 7 billion baht, citing robust growth in the hospitality business and gains from revaluation of investments related to acquisitions in Africa and Australia.

Minor, which competes with the likes of Pizza Hut and Kentucky Fried Chicken owner Yum Brands Inc, as well as Central Plaza Hotel Plc, has been aggressive in acquisitions overseas seeking to expand high-margin food and hotel businesses. Minor runs Burger King, Sizzler, Swensen’s and The Pizza Company outlets across Asia.

Revenue from overseas operations will rise to 50% of the total amount by 2020 from 45% now, Mr Chaiyapat said, adding Minor has temporarily closed some restaurants in Singapore for renovation after weak performance.

Despite China’s economic slowdown, Minor continues to expand food outlets in the country. But expansion will not be “as aggressive” as in the past few years, Mr Chaiyapat said. The firm will focus on cost controls as a means to improve profit in the country, where sales rose 24% last year.

The executive said the company is also looking for opportunities to expand the Tivoli brand internationally. Minor paid 294 million euros to acquire 14 Tivoli brand hotels in Portugal and Brazil in February.